CHAIR (Mr Hayes): This is a public hearing of the Parliamentary Joint Committee on Law Enforcement's examination of the Australian Crime Commission 2010-11 annual report. Subsection 1C of the Parliamentary Joint Committee on Law Enforcement Act 2010 requires the committee to examine each annual report of the ACC and report to the parliament on any matters arising out of such reports. The committee has not sought submissions for this inquiry.

I remind all witnesses giving evidence to the committee that they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of the evidence they have given to the committee and such action may be treated by the parliament as contempt. It is also a contempt to give false or misleading evidence to the committee. The committee prefers all evidence to be given in public but, under the Senate resolution, witnesses have the right to request a hearing in a private session. It is important that a witness give the committee notice if they intend to ask for their evidence to be given in camera. If a witness objects to answering a question, the witness should state the grounds on which the objection is taken and the committee will determine whether it will insist on an answer having regard to the grounds which are claimed. If the committee is determined to insist on an answer a witness may request that the answer be given in camera. Such a request may also be made at any time.

I remind committee members that the Senate has resolved that an officer of a department of the Commonwealth or a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked to a superior officer or a minister. The resolution prohibits any questions asking for opinions on matters of policy but does not preclude questions asking for explanations of policies and factual questions about when and how policies were adopted. Officers of a department are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis of the claim.

I welcome witnesses and invite you to make a brief opening statement. Then my colleagues and I will proceed to ask you a few questions.

Mr Lawler: I understand from the secretariat that the committee would like to first discuss the ACC's annual report and then consider the report of the chair of the ACC board separately. I also understand that the committee has been consulted and has agreed that I may speak on behalf of the chair of the ACC board, Commissioner Negus, who is overseas at the current time and offers his apologies. Before I take your questions, I would like to draw your attention to some of the commission's achievements during what was a very productive year and also to some of the charges that the agency faces.

You have heard already about the ACC-led multiagency Fusion Capability. It is progressing on schedule and already delivering tangible results. Fusion, which is in the second year of a four-year implementation schedule, promises to deliver new intervention and prevention opportunities for law enforcement. It has already identified more than 73—up from the annual report figure of 52—previously unknown high-threat targets. The near real time reporting that Fusion delivers will enable more law enforcement action on emerging threats before they become entrenched. The ACC continues to provide its partners with the most comprehensive strategic picture of organised crime available nationally through its suite of classified products called the Picture of Criminality in Australia. This strategic product suite is continually evolving and draws on the ACC's extensive tactical and operational intelligence reporting, which is highly valued by our partners.

While classified intelligence is our core business, we are well aware of the role that industry and the broader public can play in hardening the Australian environment against organised crime. To this end, in April 2011 the ACC released the Organised Crime in Australia—2011 Report and the associated crime profile series. These unclassified reports empower Australian business and citizens to manage risk and we look for more opportunities like these wherever appropriate under our security regime. The commission is also engaged in Operation Galilee and as the ACC's understanding of organised crime becomes more sophisticated, our contribution to long-term sustainable prevention strategies is being increasingly recognised. Task Force Galilee, for example, is a board-approved task force focused on combating and preventing serious and organised fraudulent investment scams targeting Australia. The task force very pleasingly comprises 19 agencies from across the Commonwealth, the states and the territories, all working together with industry groups including financial institutions. That particular task force is focused on building the national picture of this serious threat, delivering innovative intervention strategies and improving coordination across government agencies for the longer term.

A couple of challenges: one is clearly measuring performance—mentioned in an earlier hearing. While law enforcement results are traditionally measured in quantity—arrests, seizures and forfeitures—the real value the ACC brings to the fight against organised crime is best measured in its quality and harm reduction impacts. That is not to say we do not have arrests, seizures and forfeitures and you can see those clearly in the annual report. We have gone part way, I think, to capturing the view of quality through our stakeholder survey and the results are positive. We always strive for better results but to give the committee an example, 97 per cent of the senior executives from partner agencies, 85 per cent overall across the board, either agree or strongly agree that the ACC's contribution enhances efforts to combat organised crime—a very positive statistic.

This is a complex task which involves thinking about how we can best inform government policy and legislative reform where we see vulnerabilities and opportunities to enhance law enforcement capability. The committee would be aware of endeavours we are making in other areas of the committee's work in that regard. This is a challenge which we will continue to address into the future.

It would be remiss if I did not mention resources. Our stakeholders increasingly recognise the value we can bring to the national priority setting and coordination but our success brings increased demand at a time when our financial base is decreasing. Our operating model, however, is designed to be flexible and scalable—one of the reasons we brought in Project Sentinel—but it is fair to say we have reached a point where we will have to make some hard decisions about the scope of our capability and where our resources are best directed.

The ACCC board is well aware of the pressures we face. We will continue to work with the board to address these issues. We have this morning assembled the senior executive of the ACC for the committee. The executive directors that have specific organisational oversight of particular areas and we as a collective would be very happy to take your questions.

CHAIR: Thank you. Would it be fair to say that over at least the last three years that not the role but the functioning of the ACC has significantly changed in terms of its levels and its ability to service its partnered groups, particularly the state and territory law enforcement agencies?

Mr Lawler: I think it has profoundly changed. Three years ago the ACC was very much focused on long-term criminal investigations, and I think the figure was 25 per cent of our resource in court. As a small niche agency, it was our collective view and our partners' view that in actual fact our resource and capability could be better used than that. That is not to say that court procedures and prosecution are not important; they are, but there are others with much greater agencies, much more significant capacity to be able to do that. So the ACC had to profoundly and fundamentally look at where it was that it could add value to the partners that it worked with and what sort of value proposition that looked like for various partners.

Of course you are aware of the Robinson review and the recent review undertaken by Mr Farmer, which has guided the commission in that regard. What we think needs to be at the heart of our vision and the way we operate is that we do not duplicate any activity with any other agency and that we do not embark upon an activity where we do not have a partner to join with us that will ultimately take the criminal prosecution through to finality; and to understand what our partners might need whether it is strategic intelligence products or the tactical insights around targets that might have previously been unknown to law enforcement.

As you know, Chair, from previous experience, particularly our state and territory colleagues are enormously challenged in their day-to-day tactical and response to crime that faces all of our communities. So if the commission has an opportunity to stand back a little and understand some of the more profound and deep seated problems and challenges and work on those, then I think that is the best value proposition we can put forward. In summary, I think we have fundamentally changed, yes.

CHAIR: Senator Parry and I, as you are aware, are original members of this committee and I am sure the senator probably agrees with me that, even in our time of association with the ACC and seeing its operations, one of the major frustrations it seemed to us was that either a level of duplication at state and territory level for may be appropriately referred to as various class or turf wars—

CHAIR: Healthy competition, thank you, Senator. Whereas it is now becoming more and more observable that the role of the ACC, as it works in assisting partner agencies and states and territories, is actually reflected in the survey material. Not only is it the state commissioners of police who obviously are overtly aware of what the role of the ACC and its contribution is to law enforcement; but proliferating throughout the law enforcement agencies of our state and territory police services our policemen and women certainly understand the role of the ACC is bringing to bear on law enforcement generally. That is something that is advancing. It has been progressing and progressing well and that is showing through on the survey material. More importantly, I think it is now generally seen that the ACC is the nation's premier criminal intelligence agency as well as being able to target serious and organised crime. Is that taking too long a bow to the survey material that you are collecting?

Mr Lawler: I am very pleased with your comments, Chair. They are reflected in the material. I am a little bit more sanguine. I take a conservative position here, and one should never rest on one's laurels and what we need to do is continually strive for improvements. It is fair to say that the other executives of law enforcement, both at a Commonwealth and a state level, are seen to very clearly understand the business model, clearly understand and support the direction of the commission and have an exquisite understanding of just where it is that we can assist. As we go down into agencies, and some of these are very large agencies, that starts to dissipate. Whilst the levels that we spoke of in our opening statement are good, I think we can improve on them. That will be very challenging because there is a volume issue here as to the extent that we can realistically expect to inform broader agencies in the mid-levels on the actual nature of what the ACC does, bearing in mind that actually takes resourcing and capacity to do that and it then becomes a trade-off as to how much effort you put in to try to inform people and ensure people are understanding what the commission's role is versus some of the areas such as Fusion and the National Organised Crime Task Force and some of the operational deliverables. So, particularly in an environment where resources are constrained, there are hard decisions to be taken, some with strategic implications and others with more operational, tactical implications. But I agree with you, Chair, and I think we have made some very positive inroads. We are going to be working hard to try to keep those performance levels that we have currently got and improve on them. But I do not underestimate the task in doing that.

CHAIR: Not that I want to give my colleagues a free kick in terms of the issues of resources, I note you are a Commonwealth agency but nevertheless the value of the work that your agency does is not just in relation to federally based crime or internationally based crime as the work that the ACC does has a material beneficial effect in suppressing, deterring and disrupting criminal enterprises throughout the country. So it is not just those in this place that should be looking at the issue of resources. Also, your state and territory colleagues should be able to indicate more forcefully perhaps what the value of their association with the ACC is in terms of their states and territories suppressing crime. I am absolutely sure that without the assistance of the ACC, and its ability to conduct ongoing and coercive operations, the ability to attack serious and organised crime would be very much depleted in this country. I know Senator Parry wants to ask you a few questions a little later on the document The real underbelly, but those of us who are on the conservative side might say that crime in this country amounts to $15 billion a year to the community, whereas I think The real underbelly takes the view that that is very much understated. So I think it is appropriate that you clearly promote the role of the ACC and what it is achieving and not be bashful about it in actually being able to indicate the effect of disrupting crime in this country, because that means that is another crime that is not going to be committed against the community, of which, obviously, there are community costs. Very clearly, I would like to think that we can, perhaps through this committee, go out and more forcefully indicate the role of the ACC—not so much just the role but what it is fundamentally achieving in the law enforcement space across the country. I think that role is invaluable.

Senator MASON: On the issue of resources—I am not much of a bean counter, Mr Lawler, but I will do my best—I noticed the wonderful graphic in your annual report on page 67 where it says:

Visual representation of $15 billion filling a large atrium, a space just over 16 000 cubic metres in size. Organised crime costs Australia around this much every year.

As the chair said, the report commissioned by Senator Parry says the cost of organised crime is not $15 billion but at least three times that and, potentially, up to five times that cost. So we are talking about an enormous cost to the taxpayer and, indeed, to the community. Your message is that you need to be allowed to do your job adequately and the commission should not be starved of funds. In effect, it is difficult for someone in your position to say that you are starved of funds, but are you confident that with adequate resourcing you could make more significant inroads against organised crime?

Senator MASON: I understand that, but we can. The conclusion you could draw from Mr Lawler's answer and indeed from the information before us is that there is a need for more significant resourcing. We are also looking at issues about powers and so forth, where we could make greater inroads. We will take that on board and we are happy to do that.

Mr Lawler: Thank you, Senator. Regarding my very short answer—there are a number of dimensions to that—one of the primary dimensions is that the commission, particularly over the last few years in understanding the who and the what of organised crime, has a very clear understanding of the threat and risk they pose. I think we have a greater understanding today than we have probably ever had in Australia's history, through the very good work of our partners in bringing together the likes of the Organised Crime Threat Assessment and the National criminal target report—there are unprecedented levels of cooperation in providing that picture—and that is against a backdrop and a context where we know, globally, that forces are at play that are making organised crime more potent. So we have a threat and a risk that are on an upward gradient. My comments are made in the context.

Senator MASON: We are looking at the metanarrative now of demographic change worldwide. I read the other day that two-thirds of the world's middle-class will be in East Asia by 2030, so the money really is coming into our part of the world and it is happening very rapidly.

Mr Lawler: Indeed, that is right.

Senator MASON: Whereas today about 18 per cent of the world's middle-class is in East Asia. It would be 66 per cent—two thirds—by 2030. The world is changing very rapidly.

Mr Lawler: That is certainly true. The way they are connected is changing very rapidly, including the speed at which they are connected, and there are the opportunities that poses for organised criminals that we have seen in the context of project Galilee. Just getting a microscope on a couple of groups gives us a clear picture as to what we might be confronting in a decade or so.

Ms GRIERSON: I go back to the fusion capability. You say it is a four-year program. With the results already, wouldn't this become a permanent way of operating?

Mr Lawler: They are ultimately matters for government, but clearly we and our partners see enormous value in what it has delivered already, and one would hope that the capacity continues to grow. I will ask Mrs Harfield to talk about the fusion capability because she has responsibility, but it is important to note that we have talked about this as a capability. It is not a centre that has large LCD screens and all of that; this is about people and information and using those assets to actually understand things that we did not previously know.

Mrs Harfield: On the capability itself, without wanting to go into very specific details of jobs, I can give some specific examples. The way to think of it in terms of what it presents as an opportunity for Australia in relation to understanding organised crime is particularly around the discovery element of previously unknown aspects in relation to risk—the identification of threat and risk. Clearly we have opportunities with partners that already exist around the knowns. I will try not to be Donald Rumsfeld, but the known knowns are an important aspect for our agency to be clear about, certainly in terms of also establishing what is already known but is currently in disparate pockets across agencies. So it gives us that opportunity. What it creates then is an understanding of true intelligence gaps and where we can focus effort and also an understanding of what are currently unknown unknowns, which is the element of discovery. Part of the unknown targets that we have created are people who have not come to light in a traditional crime theme type, methodology or particular type of facilitator, so it presents new opportunities for conventional law enforcement intervention but also unconventional treatment of that threat and risk.

Ms GRIERSON: To have identified over 70 previously unidentified players—

Mrs Harfield: Previously unknown, yes.

Ms GRIERSON: What would be the key factor that has brought that about? Is it just the sharing of information or the processing of information?

Mrs Harfield: It is no coincidence that knowledge is the top element word on the front cover of the annual report. The fusion capability and the experts that we have in there in terms of data analysis and data mining as a collective come together with our partners to say, 'What are the intelligence gaps that we know about and what specific intelligence questions can we ask the data that then raise for us suspicion about particular types of criminality?' Those are intelligence questions that could never have been asked before because we have not connected the data together before in those ways.

Ms GRIERSON: You could probably learn from Google. You could do wonderful data mining!

Mrs Harfield: If you think about search engines, it is similar for different sorts of purposes. An example might be that we have created a way of looking at financial transactions that actually indicates what looks suspicious but simply within data. So, rather than having to start with an individual and a target and then understand the evidence collection process, we are actually looking at the data that then demonstrates either a vulnerability or new individuals.

Ms GRIERSON: Has the Privacy Commissioner or the office of information been at all involved in any of this?

Mrs Harfield: We have spoken to the privacy commissioners. We are obviously only able to work with partners within their legislative frameworks and our own legislative framework, so you cannot create an opportunity where we are simply looking randomly at data; it still has to be for specific reasons that are cognisant of the legislative frameworks in which that data is being collected and created.

Ms GRIERSON: At the end of four years, would you be in a position to sustain that fusion capability operation or would it require continuous resourcing?

Dr Lacey: The funding that is being provided is being provided predominantly for people, and that is human resources. So that is ongoing funding, notwithstanding the savings measures that are taking place. There will be a point in time each year and throughout the year where we look at our capital expenditure. Indeed, in the comments around where the environment is taking us in terms of people, money, communications, there is a growing need to revisit frequently our posture around information systems and databases. They are areas that we will need to consider beyond the four-year program if we are to sustain this effort.

Mr Lawler: The program is a $14.5 million program over four years. As Dr Lacey said, specifically in relation to operating funds, if there were not to be extended at that time it would of course be very difficult to sustain the capacity going forward.

Ms GRIERSON: I know the national intelligence assessment of the illegal firearm market is something that has been underway. In New South Wales we are seeing drive-by shootings. Are they linked to organised crime or are they just random, or are they linked to too many weapons coming in? What does the picture look like in terms of illegal firearms?

Mr Lawler: The commission has undertaken very significant work in this area through the board approved determinations. We had determinations that started in 2005 and national assessments produced in 2008 around firearm markets and firearms, trying to understand the very questions that you are asking now. Part of the national assessment that has been announced by Minister Clare is refreshing our knowledge. Our last assessment was in 2008, and we need to try to understand as best we possibly can, given that it is an illicit market, what the current facts are so that we can adjust in a national context, and potentially at a state and territory level as well, the levers that we have to restrict firearms coming into the hands of organised criminals.

It is fair to say that there has been over decades a black market in handguns. We see handguns predominantly being used in the drive-by shootings of more recent times. There is no question that some of those drive-by shootings—in fact a significant number—are linked to serious and organised criminals. Particularly the outlaw motorcycle gangs feature prominently. We know from our broader strategic work that firearms are enabler to assist organised crime to exercise authority and control over markets and their organisations. This is what we see in New South Wales and, indeed, more broadly around the country.

I am pleased that the national assessment is being undertaken. With the assistance of our state and territory colleagues—because they will need to provide us data about firearms and their use in public shootings—if we capture enough of that information, we will get a very contemporaneous picture, to the fullest extent we possibly can, of what the drivers are and, as Mrs Harfield said, where some of the vulnerabilities and gaps are and what might need to be done by way of policy, legislative or regulatory control, as far as that goes. The point of the assessment is to work from a knowledge base—so rather than guessing about what the problem is, to actually have, as best we possibly can, a clear picture of what the issues are.

Mr Lawler: The assessment has been announced and is underway. We would hope to have a reasonably completed report towards the middle of the year. We will have, of course, an opportunity to understand where that might be tracking earlier than that, but we think that we would be in a position probably by the middle of the year to report to the board on those findings. This report of course will be a declassified report for very obvious reasons.

Senator PARRY: I just want to endorse your comments, Chair, at the commencement of this hearing. I think that they were very valid and quite important. In particular in respect of the measurement aspect, Mr Lawler, I think too often we look at statistics and measure agencies by statistics, whereas your statistics are measurable within the states, more so than within your own organisation. That is a very important thing for us to take note of.

I will just do some basic housekeeping things as we are examining the report, and we want to make sure that you are operating as we want you to operate. I am very impressed with the board attendance figures. You know that I have raised this matter in the past. I think that the board attendance seems to be by all the commissioners and other heads of agencies and is much improved from what it was a few years back. Please pass on that commendation to the board.

Turning to the issue of roles within the organisation—and whilst I am on this—you do not have the title of Commissioner anymore, I gather. We used to call the head of the Crime Commission the Commissioner of the Crime Commission. Is that the case, or not the case?

Mr Lawler: My understanding is that there has not been such a title, certainly in recent years. It is the CEO, and of course we also have the chair of the board as the two statutory roles.

Senator PARRY: Thank you. I will stop calling you Commissioner and start calling you Mr Lawler. It probably pays more being a CEO.

Mr Lawler: I think that would certainly be right.

Senator PARRY: On page 50 of the annual report where it mentions the three executive directors, I gather that the titles changed as of 30 June 2011. Other titles were given at the table today and had been used in the past. What are the executive director titles now?

Dr Lacey: People, Business Support and Stakeholder Relations, which is in some part an amalgamation of what you see there as Performance and Stakeholder Relations and People and Business Support.

Mr Jevtovic: Intervention and Prevention, which predominantly picks up our involvement in joint task forces and active investigations, and there is an emphasis obviously on some of our prevention strategies.

Mrs Harfield: And on Fusion Target Development and Performance, the realignment is as a result of aligning the directorates more closely with the operating model and the work process.

Senator PARRY: That is fine. It just helps us understand that and obviously that will be reflected in the next annual report.

Senator PARRY: There has been no increase in number. In relation to—and it is a question that I often ask, Mr Lawler—declaration of interests and matters pertaining to potential conflict of interests, assets held by senior executives, has the reporting regime been complied with?

Senator PARRY: And you report to the minister or the chair of the board?

Mr Lawler: I report to the minister in relation to my own declaration of interests, and of course that also occurs through the security clearance process, and within the commission those interests and obviously the very sensitive personal information contained therein, are secured in appropriate B-class containers within my office.

Senator PARRY: Do you have anyone assess those interests when changes are made? Does anyone physically do an assessment? This is an issue that I have had with other agencies. Rather than just have them declared, does somebody actually analyse them?

Mr Lawler: The answer is no. When we say 'analyse', I look at the declarations of interests myself and so I have a knowledge of whether any of the senior executives have interests that might, in the context of our activities, create conflicts. So I have an understanding of that. But as far as analysis goes in the context of how you are putting that to me, the answer is no, beyond what I have just said to the committee. But quite clearly, matters of conflict of interest amongst members of the ACC are matters that are live all the time. This goes to broader issues of culture and reporting and integrity and making sure that people are very clear what they need to do in the context of a conflict of interest. Sometimes a conflict of interest can be removed by somebody declaring that in fact they believe there is a conflict of interest, and appropriate adjustments can be made. So it is very much to the issue of ensuring we have a culture where people (1) understand what a conflict of interest is and (2) when they identify it, are able to bring it forward in a transparent and documented way. It is my understanding that we have had no matters where a conflict of interest has been brought up and not been so declared. But we have had matters where people have declared conflicts of interest, and we have made appropriate responses, I believe, in those circumstances.

Senator PARRY: What about asset or cash acquisition that is of a significant nature, throughout the whole organisation? Is that a compulsory reporting aspect as part of the duties?

Mr Lawler: There is a requirement in relation to the security clearance process for members that, if there is significant change in people's financial circumstances, that be declared. It is of course expected that staff of the commission will do that; and to not do that would be in breach of policy and would be a code of conduct matter.

Senator PARRY: Coming to the states and your interaction with them, on a practical level how are the resources of the Australian Crime Commission accessed by state jurisdictions. I am looking at probably a low-level aspect here. Can officers in the field in a state jurisdiction contact the Australian Crime Commission direct or is there a protocol that they need to follow?

Mr Lawler: That is a very good question. What we have done in more recent times, certainly in the last three years, is set up offices in each state and territory. So there is an ACC presence in each territory, even in the smaller jurisdictions which in times gone by, for a range of reasons, did not have a representative on the ground.

Mr Lawler: Including Tasmania. And we have Superintendent Matt McCredie, who is the representative of the ACC, funded by the ACC, working out of the Tasmanian Police headquarters, with the full support of Commissioner Hine. That arrangement is replicated around the country, particularly in our smaller jurisdictions and in our more remote jurisdictions. In such places, the connection between the state police—particularly the state police commissioner—and our representative, who is normally a state police officer on secondment, becomes a very important two-way nexus: (1) to actually brief and ensure that state agencies—not only state police, but also state federal agencies in those jurisdictions—understand the commission's capability; and (2) to ensure there is reach-out, liaison and engagement with them, particularly in the context of receiving intelligence but also in providing intelligence, capability and opportunity. This is particularly around the target development that Mrs Harfield spoke about. I think we have a much stronger nexus there than has previously been the case.

But, that having been said, there will invariably be times when the states and territories will not see much value in particular activities that the commission might be doing, whether it is strategic products or whatever it might be. So it is a constant activity for us to engage with the states and territories. But my sense is that they would have access to the commission and the commission's capability, even in a national context, and that is the brief we have given our office managers.

Mr Jevtovic:I think it would be fair to say that, in every jurisdiction of Australia, the relationship at all levels from our state office representatives to our operatives in each jurisdiction, will even receive phone calls where law enforcement officers will want to strategise around opportunities against a particular crime type. So we have that cascading relationship, from the CEO's role with the board all the way through to the people who are the coalface.

Having just come from a jurisdiction over a number of years I can say that that relationship at the working level is of a very high standard.

Senator PARRY: That is good to hear. I come to the report that I had commissioned by an intern on the real cost of crime. This is probably the first public airing. We met with representatives of the Australian Crime Commission after the release of the report and had a very good, frank and candid discussion. Has there been any assessment or further assessment as a result of that report undertaken by the Australian Crime Commission, or do you wish to make any comments—and I am very happy to accept critical comment—about that report and whether or not the commission will re-examine its method of calculation of the cost of serious and organised crime?

Mr Lawler: I might start off by making broad comments and then I might defer to Mrs Harfield to take you through some detail in that report. In a broader context, I think it is very important for the public and indeed government to understand what the cost is of organised crime to our community. The commission has, for a number of years now, been working with the Australian Institute of Criminology to understand—to the extent one can in an illicit context—the costs to the community. That has been extraordinarily challenging for the Australian Institute of Criminology. They spent a very significant amount of time, I think about 18 months, in studying this very question and looking for models on which such a calculation could be done.

If one puts out a figure in the public arena then, quite rightly, that figure can and should be challenged as to the basis on which these assertions are made, which is why the commission has adopted a conservative position here. It has done so on the basis of authoritative world standards adopted by the World Bank, the UNODC and others, which put the cost of organised crime at between one and two per cent of GDP. They even acknowledge that that might be on the low side. In the context of the most recent GDP figures for Australia, which I think are about $1.34 trillion, that puts it in the range of about $13 billion to $26 billion, give or take, acknowledging that even that range is conservative. Indeed the UK figures have a much higher percentage. I think it is about four or five per cent. If I were to put the strict proof on that I would want to take that figure on notice, but it is in that order. It is certainly a significant increase.

The commission is landing at between $10 and $15 billion. We think we are in an absolutely defensible position. The picture on page 67 of the annual report is the $15 billion. Whether it is $15 or $17 billion, in one sense, a $15 billion cost to the Australian community is just an enormous amount of money. But we would concede from the good work that was done in that work that, in fact, the figure might be much higher. One reason is the percentages we have spoken of and the second is it is fair to say this is an illicit environment, so the figures are not publicly available, and one makes best judgments and estimates around the cost.

Mrs Harfield: In relation to the report itself and having discussed that within the commission, we have initiated a small and fairly modest piece of work. What was really nice about the report was that it triggered some questions for us about what you could and should include and why and a piece of work about how measurable that might be and how useful that might be against what we currently use and then some comparison around your report and jurisdictions, such as whether you have varying pieces of work going on. So we are trying to plug into those. It has generated for us some sense of an internal assessment of whether we could do, in a modest way, a piece that would help inform whether we are nearer where the report you commissioned lands or whether it is still within that modest area.

I think the other thing that has happened which we have taken cognisance of is the global financial crisis. There is not really a sense, in terms of research that is out now, whether the proportion will increase against GDP, whether that would stay the same in a bold, monetary type figure or if, in fact, serious and organised crime will be able to make more money as a result of the global financial crisis. I think there is some interesting context there that we just need to think through as well.

Senator PARRY: That is encouraging. I think I would speak for all of the committee in saying that we would encourage you to come up with more definitive figures and maybe report back to us at some stage in the future. It is an important figure, and it is bandied around a lot. I like your terminology, Mr Lawler. The figure you currently use is defensible but it would be nice to get a more accurate picture where we possibly can. That would be handy.

CHAIR: Just going back to where we started the conversation today, around what seems to be the greater use and reliance by state and territory law enforcement agencies on some of the unique qualities that the ACC can bring to bear. Then we had a short discussion about resources and the need to ensure that law enforcement capability is resourced. What I do not see, with the greater understanding and the greater use of the extraordinary powers of the ACC by its partner agencies, is that translating into increased shared revenue from the services that you are applying to the states. From the report, I think it is something like $4 million—is that what we get back from the services that we lend to states in partnered operations?

Mr Lawler: As Dr Lacey is looking for those figures as to what the actual contributions from the states and territories are, and noting your earlier comments about contribution, I find it difficult to put myself in the position of a state and territory police commissioner in determining what resource they might provide to the commission versus their own challenges in meeting the demands of their state and territory governments in dealing with crime in their particular territories. That having been said, clearly the work that we do is collaborative. It is fiscal at one level but then there are often partnership arrangements—and I could name a number—where state and territory police and state and territory commissioners contribute very significant resources in operations and the provision of capability that the commission may not have.

CHAIR: They also have the ability to access proceeds of crime if the matter is prosecuted in their particular state or territory.

Mr Lawler: That is true. And there is a debate as to whether more could be done. I obviously come from a biased position in the commission, but bearing in mind that the state and territory commissioners make up a significant number of our board members, I think we have encouraged participation. We have tried to make the case for increased and enhanced cooperation, which I think has been generally well received—

CHAIR: Very successful, I might add.

Mr Lawler: I think among the members of the board—not only state and territory police commissioners but some of the Commonwealth agencies—there have been very strong collaborative efforts and a very strong contribution of resource to the commission. But, as you know, everybody has their own competing priorities and the commission is a small agency working in a very unique and difficult period.

CHAIR: Hence, when we are talking about resources, this is where it does become appropriate. State and territory commissioners make up a large part of your board. Clearly they will see your capability and unique powers and will obviously work now more and more in collaboration because of that uniqueness and being able to partner in targeted law enforcement operations. What I do not see, on the other hand, when they move out of your board—and I am not quite sure how they negotiate then with the ACC after being a board member one day and then negotiating with the ACC about the payment for collaborative arrangements the next, given the fact that they are directly responsible to a state or territory government. So whilst I think we should not break crime down to looking at geographic boundaries or be revisiting the Constitution on criminals, nevertheless there is a level of subsidisation that occurs as a consequence. I think we do need to look at the resources of the ACC, and probably in that context, to make sure where we are applying the extraordinary powers and abilities of the ACC, that it is not only recognised, which it clearly is because it is being used more and more, but it actually attracts partnered funding arrangements from state and territory governments.

Dr Lacey: The dollar figure for the 2010-11 year was about $4.1 million provided. But there is a significant amount that is not seen in terms of the in-kind contributions by states and territories.

CHAIR: But the names on the charge sheet will generally be the state or territory police force which you have lent the resources to.

Dr Lacey: Indeed.

CHAIR: In terms of the impact on crime, deterrent value and also prosecutions, when you think about that, $4 million coming back to the ACC across the whole 12 months is—well, goodwill is one thing but sometimes it should be recognised more tangibly.

Mr Lawler: I do not know how I can respond to that, Chair!

Senator PARRY: Chair, on that point, would it be possible for an annual collection of statistics that indicates the state, Territorian and AFP arrests or prosecutions that had ACC involvement in intelligence, or is that just too difficult?

Mr Lawler: No, that is not too hard, but I have mentioned to the committee before that there is a dimension of that that makes it very difficult. It goes to Ms Grierson's point about performance measures. It is to do with the material that is provided. If you have a very stark case of, if we contact the state police tomorrow and say if you stop car X and look in the boot you will find Y, which might be 10 kilos of heroine, and they do that and they make the arrests and they find cash and seize the drugs, the nexus is very clear and immediate and obvious. What we often deal with is less clear nexuses. So it may well be that we do a hearing that provides a weakness where the state police might then go and execute a search warrant, have somebody cooperate with them and then roll on and seize a whole lot of drugs or money or whatever it might be.

Mr Lawler: That is right, and it may well be that that happens over 12 months. And that is not diminishing for a minute the very good work that the state and Territory police or the federal agencies will do. But over time, of course, the initial involvement of the commission might not be as well recognised as with the more immediate case. Then you have got more obtuse examples, again, where, for example, the ACC's intelligence holdings and intelligence activity or its investigative activity might actually be the last piece in the jigsaw puzzle in relation to a brief against somebody. Relatively small in the scheme of things but against the tapestry, absolutely the crucial piece of evidence that is required that allows the prosecution. So, whilst we try very hard—Mrs Harfield can speak about this further—to understand the value of the intelligence and the work of the commission to operational outcomes, it will only be part of the picture. But we are very happy to provide that material to you. Some of the material in this annual report and in more recent figures might go to that.

Mrs Harfield: Particularly where we are doing work with partners, there are clear linkages but that can vary in its tenor and context. So it might be a specific requirement about the use of coercive powers or it might be a very coordinated, collaborative type of task force arrangement. So in some of those circumstances bold measurement is more simple than in other circumstances.

We are looking, from a performance framework perspective, at how we might capture some of those other dimensions of added value, and how that would work within particular geographical locations. The other aspect of our work is really around understanding the gap element and how you might close that in the long term. So target hardening activity—making Australia hostile—which is a particular determination of ours, goes much more to the heart of long-term sustainable impact. Although, out of that you will get some quantifiable data it is the fact that you are going to prevent that in the future is the thing you want to start to measure. So we are looking at how you might do that so you can demonstrate long-term impact rather than quantity type of elements. But it is not easy. We are working through that across time. But I take your point.

Senator PARRY: Measurement has been the theme, really, of our examination today, and that we should not just be reliant upon facts and figures on charge sheets, necessarily.

CHAIR: Particularly as we move closer to issues of unexplained wealth, for instance.

CHAIR: I would like, once again, to thank representatives of the Australian Crime Commission. I congratulate you on your annual report. As usual it is of a very high standard. It certainly is a pleasure to be on this committee and working with the ACC. I think you do a marvellous job.

Not that we wish to be critical, but I do take Senator Parry's point about measurement. I think the role of the ACC is likely to be increased substantially with its various partner agencies and as that happens we want to make sure that it is properly appreciated and, in turn, tangibly appreciated.